INFORMATION TECHNOLOGY

Indo-German Business Relation Survey Report

The survey conducted by us have views of Indian IT industry of German IT market and German business center as a whole. Indian IT industry is focusing on German market because of its potential and large economy. Indian IT Industry is growing looking ahead to grow with the Germans.

Methodology

The survey conducted consists of Indian IT companies either operating in Germany or planning to open their office in six months time, with a sample size of 60. The survey was conducted with structured questionnaire and in depth interview with the respondents. Out of which 50 companies already have presence in German market and 10 are those which are planning to enter into this market in near future.

Analysis

• All the respondents from the sample are looking at the German market with the focus areas as follows:
  
• Hardware sector
  
• Software Build Services
  
• IT Enabled services and BPO sector
  
• Internet & Online services sector
  
• Networking sector
  
• Telecom sector
  
• And also the focus is on Software services, Application Management Services and IT Consulting

We have found the responses basically in three categories like Perception of respondents on Germany market, Problems faced and Recommendation they have suggested.

1. Perception

Indian IT companies wants to look at Germany for their business purpose because of the following reasons:

The 60% of the respondents believe that

• German market is the largest European market for information and communication technologies and there is good untapped potential of the market.
  
• · 30% feels that it is the third largest economy in the world and the largest in Europe and is almost twice the size of the next biggest market, the UK.
  
• It is the hub of the industrial activity
  
• It has an array of world class IT infrastructure already in place. The need of the hour is enhancement and modernization.
  
• There is significant gap in the Demand-Supply ratio of the skilled manpower in ICT sector.
  
• 30% feels that a strong relationship can be built by partnering with the German telecom OEMs to offer them our unique offerings of products as well as outsourcing services to reduce their costs, risks and time to market.

Big opportunities for Indian IT industry in the German market

Win-win value proposition and partnering with companies in the relevant part of the value chain.

• 20% of the respondents feel that at present the major growth drivers are downsizing. Large prospects lies in introduction of new technology and implementation of increasingly complex systems, systems integration and IT training.
  
• 40% feels that most important growth area will be the use of the Internet as a virtual market place, which increases demand for internet-related network services. The increasing complexity of hardware platforms and applications environments is driving demand for operations management and support. Others include the integration of Internet and e-commerce applications with ERP, CRM and BIS.
  
• 50% feels that offshoring is an important platform. Acquisitions of local outfits, delivery with necessary local flavor and partnering with local companies can be some of the methods to exploit the opportunities in Germany.
  
• 20% have a view on industrial sectors viz. BFSI (Banking, Financial Services and Insurance), Manufacturing, Small and Medium Enterprises (Mittelstand) segments.

Germans knowledge about the capabilities of the Indian IT industry

• 40% feels that Germans are quite knowledgeable about Indian capabilities though practical experience is missing.
  
• 30% feels that Offshore outsourcing is still not so common like in the US and needs clear statements. Traditional core sectors in manufacturing viz iron and steel, power and energy etc and a majority of SME's are not fully aware of the same.
  
• 20% respondents' feels that every fifth software professional invited to Germany is an Indian. Out of the total green cards issued, 21% were given to Indian professionals.

View on Indo-German business relationship.

• The bilateral trade is of the order of US $3.80 billion per annum. Also there are 1000+ Indo-German joint ventures already in place and 1500+ German companies have agents in India. The potential for growth is high. Still much has to be accomplished.
  
• 40% respondents feel that German market potential is evolving and needs to be exploited.
  
• 10% feels that while there is no specific anti Indian sentiment, at the same time India doesn't enjoy any envious position in terms of business relationship with Germany. Industry thus needs to put in some collective efforts to further boost India's prospects to become the most favors IT destination.

2. Problems

Indian IT companies have mentioned the following problems faced by them.

In the Trade barriers (import duties and customs)

• Problems faced are high in Software sector and Labour laws (compensation package)

Business Challenges

Competition from Local Companies and Lack of Business Information are the two major business challenges faced by Indians.

Level of comfort of Indian IT companies in Germany

• 30% feels that Indian companies enjoy a distinct advantage when it comes to doing business in Germany. Many large Indian IT companies already have presence in Germany. Indian companies have gained experience and significantly improved their level of comfort in the Germany region owing to sustained presence over long-term engagements.
  
• 20% feels that Indian IT companies have always been wanting to penetrate the German market albeit without the kind of success one would have liked to see. The main reason has been difficulty of Indian companies to overcome the language barrier and the present economic environment makes it even tougher. 70% feels that Language and cultural barriers are very high. Confidence building measures are required.

3. Recommendations

• Exchange of delegations between the two countries. Better-organized industry meets with networking opportunities. Increased interaction between industry will also help understand the value proposition which Indian companies to bring and benefit the German industry
  
• Business Forums sponsored by the Indian HC in Germany supported by FICCI. Trade sponsorships from Governments of both Germany and India. Exchange between Indian and German cultural bodies should be promoted with a view to enhance understanding of the varied cultures.
  
• Changes in data protection laws.
  
• Easing of visa restrictions, faster processing of short duration work permits.
  
• Education of core sectors industries towards IT and IT enablement.
  
• The inherent advantages of the offshore development model lies in capital expenditure and depreciation